FedEx spins off its $8.9 billion LTL freight unit, reducing total revenue by 10.1% and cutting operating profit by $1.5 billion.
FedEx Corp (FDX) shares dropped nearly 19% after spinning off its less-than-truckload freight business, FedEx Freight (FDXF), into a separate company. Shareholders received one FDXF share for every two FDX shares held as of May 15, distributing 80.1% of Freight’s outstanding stock.
FedEx Freight contributed $8.9 billion of FedEx’s $87.9 billion total revenue last year, or 10.1%, and generated $1.5 billion of its $5.2 billion operating profit. The spin-off will reduce FedEx’s revenue base, complicating efforts to meet this year’s $93.7 billion revenue target.
FedEx plans to divest its remaining 19.9% stake in Freight over the next two years, which may pressure FDXF shares. The move shifts focus away from the lower-margin freight segment.